Gold prices in India edged higher today amid mixed global cues. On MCX, August gold futures were up 0.35% to ₹47,180 per 10 gram after a two-day decline. Silver futures on MCX rose 0.7% to ₹47,719 per kg. In the previous session, gold had weakened 0.64% while silver fell 0.8% on MCX. Gold prices in India have remained volatile after hitting a record high of about ₹48,000 last month. Globally also gold has struggled to break above above $1750/ounce.
In global markets, gold prices were flat today as the US dollar weakened after Federal Reserve announced it would buy individual corporate bonds in the secondary market. A rebound in global equity markets also capped gold's upside. Spot gold was flat at $1,725.23 per ounce. Among other precious metals, platinum rose 0.7% to $817.20, while silver fell 0.4% to $17.37.
Overnight, the US Federal Reserve announced plans to buy individual corporate bonds through its Secondary Market Corporate Credit Facility. Reports of Trump administration is considering $1 trillion in infrastructure spending to boost economy also lifted equity markets and improved risk sentiment across the world.
The US dollar index fell 0.23% against its rivals, making gold less expensive for holders of other currencies.
Gold typically benefits from stimulus measures from central banks as it is widely viewed as a hedge against inflation and currency debasement. Weaker economic outlook and persisting worries about virus may result in central banks and governments continuing with stimulus measures, Kotak Securities said in a note. This may support gold on the downside. Global cases of the coronavirus has reached over 8 million.
But weaker global growth outlook also dampens outlook for consumer demand of gold, the brokerage said.
"The precious metal will benefit from safe-haven buying unless equity market stabilizes. But with price still struggling to break above $1750/ounce we recommend waiting for corrective dip before creating fresh long positions," it added.
Prevailing high prices likely to hit the physical demand of gold, Geojit Financial Services said in a note, adding that fiscal stimulus measures taken by central banks and rising geopolitical tensions continue to offer lower level support the commodity. Gold prices in India are up about 20% so far this year.